VC book tells all

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SAN FRANCISCO (CBS.MW) -- During summer's doggiest days, books make the rounds. Lots of them. Right now, a ton of tomes about day-trading are making the rounds.

So many, I can't count 'em. Who has time to trade with all these books, right?

One of them, "Digital Day Trading" (Dearborn) by Howard Abell, is actually a sequel to his "The Day Trader's Advantage." Best advice in the book: "Don't take tips." Best feature: a chapter on how to compete with Nasdaq market makers, who day-trade for a living.

Another book, "Day Trade Online" (JohnWiley & Sons), has hedge fund manager and author Christopher A. Farrell talking about making $4,000 in 18 minutes. He says he's traded more than 15 million shares via the Internet. Farrell is in his mid-20s, so I guess he's better qualified than anyone to explain what it takes to do the day-trading deal each and every morning.

Ever notice why U.S. day-traders don't live in Hawaii? Who wants to start their day at 3:30 a.m.? 'Zero Gravity' hopes to ride VC wave

The book that catches my eye this week is not about day-trading. Officially, it has yet to be released. The book, "Zero Gravity," is due out in November and looks at the fast-moving world of venture capital.

Internet analyst Steve Harmon, who examines Web companies at www.internet.com, tells me he wrote it as a kind of handbook to the Internet era, where garage and "grunge heroes" sell ideas to heavily loaded venture funds, then see their payoffs happen in months via initial public offerings or corporate mergers.

Harmon's bumper sticker for the next century: "Get Big Fast, And Then Get Bigger." That's appropriate for a U.S. venture capital industry that is sinking almost $2 billion a year into Internet start-ups.

The best thing about Harmon's upcoming book (I've seen a preview) is how he fills it with advice an Internet CEO wanna-be can expect in the real world. What, for example, does a venture capitalist expect in the way of return for risking his/her money? About a 2,000 percent return. That's a minimum, Harmon says.

What are the biggest mistakes a wanna-be can make when appealing for someone else's money? Here, Harmon does his homework by interviewing VC executives themselves. One of them, oft-quoted Ann Winblad of Hummer Winblad, which has backed Wind River Systems
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and dozens of other software developers, says lots of mistakes are getting hidden amid the mania for Web start-ups.

"Mistake No. 1 is that they assemble whole teams instantly, a team-in-a-box, thinking that they have to have a full team," Winblad tells Harmon about the wanna-bes in their search for venture cash. "Then we spend a lot of time figuring out which of the team is really the team and which has been assembled for the occasion."

Harmon did his homework in the book, which will be published by Bloomberg Press. He had help in his research from Venture One, a California research company. The chapter on valuations tracks venture capital financings alphabetically for scores of U.S. companies -- from early stage to IPO. CNet
CNET, +2.54%
the computer network publisher, raised just $650,000 when it first hit the VC road in 1993. How about America Online
aol
? It raised $1.5 million in a first round of financing in June 1986.

My absolute favorite section in "Zero Gravity" is a list of descriptions for the latest crop of Web wanna-bes, like BrainPlay.com, a provider of children's software via the Internet. Deep down, I can never keep all the newest names straight. (Now I won't fumble names at that next microbrew VC cocktail party.) For more, see Harmon at www.e-harmon.com.

Not that Harmon is totally enamored of the Web money culture. Harmon this week speaks his mind about Ask Jeeves Inc.
askj
a rocketing IPO that he says looks vastly overvalued after a stellar week on Nasdaq ($1.8 billion market capitalization vs. quarterly sales of $1.1 million). (See chart above.) Another IPO that might be "a little ahead of itself," Harmon says, is GoTo.com Inc.
goto
which sports a $2.7 billion stock market worth after 11 days of Nasdaq trading.

GoTo stock rose 22 percent Tuesday on a day when Internet stocks as a group surged. BrainPlay, anyone?

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